Risk Management Agency Federal Crop Insurance · methods to mitigate production and revenue risks...

Risk Management Agency

Federal Crop InsuranceThis presentation highlights features of the Risk ManagementAgencyprograms and is not intended to be comprehensive. The informationpresented neither modifies or replaces terms and conditions of any crop insurance policy or the county actuarial documents. Consult a cropinsurance agent for further details.

• Provides farm producers and owners various methods to mitigate production and revenue risks

• Strengthens the safety net for Ag producers

• Helps to maintain a durable rural economy

Purpose of Crop Insurance

History of Federal Crop Insurance

• Severe dust storms causing catastrophic drought, known as the Dust Bowl, devastated American agriculture during the 1930s.

• Congress created the Federal Crop Insurance Corporation (FCIC) in 1938 to address the needs of farmers impacted by the Dust Bowl.

The Dust Bowl in Oklahoma, 1936

History of Federal Crop Insurance

• In the 1980s, FCIC began working with private insurance companies to deliver and service crop insurance. Today insurance is offered by 15 Approved Insurance Providers (AIPs).

• The USDA Risk Management Agency (RMA) was created in 1996 to administer FCIC programs and risk management and education programs.

RMA and AIP Leaders at USDA’s Agricultural Outlook Forum, 2017

• The Risk Management Agency develops and approves policies, and provides program oversight (to prevent fraud).

• The Approved Insurance Providers have a contract with RMA and sell and service the Federal crop insurance policies

A public-private partnership

Roles & Responsibilities

• Develops and approves policy terms, rates, and prices

• Validates premium and loss information; determines underwriting gain or loss; settles with insurance companies

• Reviews new products and program expansionand helps producers manage their business risks by using effective, market-based risk management solutions

Role of RMA in More Detail

89% of U.S. Croplands are Federally Insured

Source: Analysis of Federal Crop Insurance Portfolio, September 2017

Increasing Liability

1999: $30.9 B

2016: $100.5 B

Federal Crop Insurance Program Growth


Program Expansion


• Adverse Weather (frost, heat, drought, hail)• Catastrophic Weather Events – hurricanes, etc.• Failure of Irrigation Water Supply• Fire• Insects and Disease

• If proper control measures are used, and• Accepted good farming practices

• Wildlife• Price Fluctuation

Losses Covered

Producers must:

• Report acreage, and any required protection, accurately

• Meet policy deadlines

• Pay premiums when due

• Report losses immediately

Producer obligations

Producers will receive:

• Accurate answers to questions on types of coverage

• Prompt processing of their policy

• Timely payments for covered losses

Producer expectations

• If applied for, and granted, BFR status lasts 5 years• Exempt from admin fee for catastrophic, additional coverage

policies • Additional 10 percentage points of premium subsidy for additional

coverage policies that have premium subsidy• Use of the production history of farming operations that you were

previously involved in the decision making or physical activities• An increase in the substitute Yield Adjustment, which allows you to

replace a low yield due to an insured cause of loss, from 60 to 80 percent of the applicable transitional yield (T-Yield)

• Read more: www.rma.usda.gov

Beginning Farmer & Rancher Benefits

http://www.rma.usda.gov/

What if I want to insure a commodity that RMA doesn’t cover in my county?

There are three basic options:

• Submit a Request for Actuarial Change to RMA through a Crop Insurance Agent

• Whole Farm Revenue Protection

• Apply for the FSA Noninsured Crop Disaster Assistance Program (NAP)

Requesting Insurance Not Available in Your County

• By submitting a Request for Actuarial Change through a Crop Insurance Agent, RMA can individually insure you for any crop that has an existing insurance program in another county.

• You must have produced this crop (or a similar crop) in the county or area for at least 3 years.

• Your request must be submitted on or before the sales closing and/or cancellation date for your crop.

Whole-Farm Revenue Protection (WFRP)

Whole Farm

Revenue Protection

Offered as a pilot program for 2015 insurance year and beyond

To be eligible, you must have 5 years of filed IRS Schedule F tax forms for your farm operation

Allows farmers to insure all of the crops and livestock on their farm under one insurance policy

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• The Agricultural Act of 2014 (Farm Bill) instructed RMA to develop a whole-farm diversified risk management plan of insurance

• Since 2015, WFRP has provided coverage for all revenue produced on a farm

• Recognizes diversity with higher subsidy levels

• Whole-farm subsidy for farms with two or more commodities meeting the diversification requirements

• Includes farms with specialty or organic commodities (crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets.


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Apply by Sales Closing Date –February 28, 2020 Five years (3 for BFR) of Tax

Records from your farming entity 5 most recent Schedule F’s or a

substitute Schedule F

List of commodities you plan to produce Expected yield and revenue for each

Your Agent will be able to help you through this process

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When revenue from your crops is less than your insured revenue Natural causes of loss

Decline in market price during the insurance period

Taxes must be filed for the insurance year before any claim can be made (2018 year farm taxes must be filed for 2018 Indemnity payment)

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Policies Earning Prem

Liabilities (millions $)

Total Prem (millions $)

Indemnity (millions $)

Loss Ratio

2015 1122 $1,146.0 $53.0 $70.0 1.32

2016 2198 $2,327.3 $118.3 $172.7 1.46

2017 2740 $2,842.5 $143.0 $153.5 1.07

2018 2496 $2,686.2 $139.3 $25.9 0.19

2019 1799* $2,054.6 $145.2 $0* N/A

Whole Farm Revenue Protection (WFRP)

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2020 WFRP Updates Change to revenue-to-count for NAP and disaster payments Adjustment of Livestock and Nursery limits Addition of provisions specific to hemp Implementation of history smoothing provisions Adjustment to indexing calculations

How to find more informationwww.rma.usda.gov

http://www.rma.usda.gov/

Specialty Crops

2018 Farm Bill Requirements for Specialty Crops Specialty Crop Liaisons

Website

Research and Development Requirements

Whole Farm Revenue Protection

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Specialty Crops Farm Bill: ‘‘The Specialty Crops Coordinator shall designate a Specialty

Crops Liaison in each regional field office.” Specialty Crops Liaisons have been established in each RMA regional office

• Liaisons serve as main point of contact for local specialty crop producers

• Keep abreast of any risk management needs for local specialty crop producers

• Provide recommended program changes to Specialty Crop Coordinator• New specialty crop programs

• Expansions to existing specialty crop programs

• Works with Specialty Crops Coordinator in exploring adoption of recommendations26

Specialty Crops - Liaisons

Regional Office - Liaison

Billings, MT – Steve Junghans Spokane, WA – Nick Gans

Davis, CA – Thalia Barajas Springfield, IL – Adrienne McTaggart

Jackson, MS – Kanika Davis St. Paul, MN – Craig Christianson

Oklahoma City, OK – Devin Lolles Topeka, KS – Amanda Whitehurst

Raleigh, NC – William Barnes Valdosta, GA – Matthew Wilkin

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Specialty Crops - Website Farm Bill: The Specialty Crops Coordinator shall establish a website focused

on the efforts of the Corporation to provide and expand crop insurance for specialty crop producers.’’

Specialty Crops Landing Page created Lists Specialty Crops Liaisons and provides their e-mail link

Specialty Crops Reports Provides annual updates on program expansions for specialty crops Outreach efforts with specialty crop producers and other stakeholders Statistics on program growth for specialty crops

• Online mechanism for public to provide feedback on specialty crop program improvements• Upcoming: Calendar of upcoming events—producer outreach meetings, etc. 28

Specialty Crops – Research & Development

Farm Bill: “The Corporation shall prepare and present…each of the following:(i) …a policy or plan of insurance for a commodity for which there is no

existing policy or plan of insurance.(ii) Expansion of an existing policy or plan of insurance…(iii) A new policy, plan of insurance, or endorsement, for commodities

with existing policies or plans of insurance…’’

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Specialty Crops - Research and Development

New Asparagus Program

Caneberry Expansion to Blackberries

New Horseradish

Program

New Hazelnut Program

New Winter Squash/

Pumpkin Program

New Carrot Program

Dry Pea Expansion

to Fava Beans

Sweet Potato

Expansion

Grape Expansion

to new Counties

Cabbage ExpansionApiculture

Expansion

Quarantine Endorsement

Expansion

Cucumber Expansion

Creamer Potato

Endorsement


Specialty Crop Coordinator and Liaisons conduct outreach with growers and other stakeholders based on recommendations

• Further gauge interest in risk management protection

• Determine risk management needs—yield, revenue protection?

• Discuss potential program viability

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Specialty Crops – Research and Development

Outreach Conducted:• Guar producers in Brownfield, Texas – November 2018

• Winter squash/pumpkin producers in Hadley, Massachusetts – March 2019

• Asparagus, carrots, squash producers in Grands Rapids, Michigan – December 2018

• Horseradish producers in Collinsville, Illinois – June 2019

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Valdosta, GA recommendations• New Creamer Potato Endorsement

• Provide coverage for potatoes grown under the ‘creamer’ practice

• Current policy not adequate protection

• Looking at implementing recommendation as well as overall evaluation of entire potato program

• Expand Quarantine Endorsement to Florida counties • Proposed to cover losses due to a quarantine

• Intended for fruits and vegetables in south Florida that can be experience outbreaks of Oriental fruit fly

• Avocados, tomatoes, various citrus, mangos, carambola

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Specialty Crops – Research and Development

Challenges in developing new risk management protection for specialty crops• Limited available data

• Yield data are necessary to develop crop insurance premium rates that are actuarially sound

• Price data are needed to establish a price election or to develop revenue programs

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Specialty Crops –Research and Development

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Factors considered in exploring program development efforts Documented producer and industry interest (letters of support) Evidence of yield, pricing data, and commitment to provide data Number of production acres Number of producers Crop value Whether crop is located in underserved area Estimated cost for development to FCIC

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Future vision for new sectors of agriculture and potential markets Urban Suburban Local direct to consumer Hydroponic Aeroponic High tech vertical technology farms Indoor farming

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Thank you!

Risk Management Agency Federal Crop Insurance · methods to mitigate production and revenue risks...

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